Foreign investors hope India dials back policy shocks after Modi win

Fri, 2019-05-24 09:42

NEW DELHI: Foreign companies in India have welcomed Prime
Minister Narendra Modi’s election victory for the political
stability it brings, but now they need to see him soften a
protectionist stance adopted in the past year.
Modi’s pro-business image and India’s youthful population have
lured foreign investors, with US firms such as , Walmart
and Mastercard committing billions of dollars in investments and
ramping up hiring.
India is also the biggest market by users for firms such as
Facebook Inc, and its subsidiary, WhatsApp.
But from around 2017, critics say, the Hindu nationalist leader
took a harder, protectionist line on sectors such as e-commerce and
technology, crafting some policies that appeared to aim at whipping
up patriotic fervor ahead of elections.
“I hope he’s now back to wooing businesses,” said Prasanto
Roy, a technology policy analyst based in New Delhi, who advises
global tech firms.
“Global firms remain deeply concerned about the lack of policy
stability or predictability, this has sent a worrying message to
global investors.”
India stuck to its policies despite protests and aggressive
lobbying by the United States government, US-India trade bodies and
companies themselves.
Small hurdles
Modi was set to hold talks on Friday to form a new cabinet after
election panel data showed his Bharatiya Janata Party had won 302
of the 542 seats at stake and was leading in one more, up from the
282 it won in 2014.
After Modi’s win, about a dozen officials of foreign companies in
India and their advisers told Reuters they hoped he would ease his
stance and dilute some of the policies.
Other investors hope the government will avoid sudden policy
changes on investment and regulation that catch them off guard and
prove very costly, urging instead industry-wide consultation that
permits time to prepare.
Protectionism concerns “are small hurdles you have to go
through,” however, said Prem Watsa, the chairman of Canadian
diversified investment firm Fairfax Financial, which has
investments of $5 billion in India.
“There will be more business-friendly policies and more private
enterprise coming into India,” he told Reuters in an
Tech, healthcare and beyond
Among the firms looking for more friendly steps are global payments
companies that had benefited since 2016 from Modi’s push for
electronic payments instead of cash.
Last year, however, firms such as Mastercard and Visa were asked to
store more of their data in India, to allow “unfettered
supervisory access,” a change that prompted WhatsApp to delay
plans for a payments service.
Modi’s government has also drafted a law to clamp similar
stringent data norms on the entire sector.
But abrupt changes to rules on foreign investment in e-commerce
stoked alarm at firms such as Amazon, which saw India operations
disrupted briefly in February, and Walmart, just months after it
invested $16 billion in India’s Flipkart.
Policy changes also hurt foreign players in the $5-billion medical
device industry, such as Abbott Laboratories, Boston Scientific and
Johnson & Johnson, following 2017 price caps on products such
as heart stents and knee implants.
Modi’s government said the move aimed to help poor patients and
curb profiteering, but the US government and lobby groups said it
harmed innovation, profits and investment plans.
“If foreign companies see their future in this country on a
long-term basis…they will have to look at the interests of the
people,” Ashwani MaHajjan, an official of a nationalist group
that pushed for some of the measures, told Reuters.
That view was echoed this week by two policymakers who said
government policies will focus on strengthening India’s own
companies, while providing foreign players with adequate
opportunities for growth.
Such comments worry foreign executives who fear Modi is not about
to change his protectionist stance in a hurry, with one offical of
a US tech firm saying, “I’d rather be more worried than be

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Source: FS – All-News-Economy
Foreign investors hope India dials back policy shocks after Modi win